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By:

Rashmi Kulkarni

23 March 2025 at 2:58:52 pm

Loss Aversion Is Why Your Good Idea Fails

Your upgrade is their loss until you prove otherwise. Last week, Rahul wrote about a simple truth: you’re not inheriting a business, you’re inheriting an equilibrium. This week, I want to talk about the most common reason that equilibrium fights back even when your idea is genuinely sensible. Here it is, in plain language: People don’t oppose improvement. They oppose loss disguised as improvement. When you step into a legacy MSME, most things are still manual, informal, relationship-driven....

Loss Aversion Is Why Your Good Idea Fails

Your upgrade is their loss until you prove otherwise. Last week, Rahul wrote about a simple truth: you’re not inheriting a business, you’re inheriting an equilibrium. This week, I want to talk about the most common reason that equilibrium fights back even when your idea is genuinely sensible. Here it is, in plain language: People don’t oppose improvement. They oppose loss disguised as improvement. When you step into a legacy MSME, most things are still manual, informal, relationship-driven. People have built their own ways of keeping work moving. It’s not perfect, but it’s familiar. When you introduce a new system, a new rule, a new “professional way,” you may be adding order but you’re also removing something  they were using to survive. And humans react more strongly to removals than additions. Behavioral economists Daniel Kahneman and Amos Tversky called this loss aversion where we feel losses more sharply than we feel gains. That’s why your promised “future benefit” struggles to compete with someone’s immediate fear. Which seat are you stepping into? Inherited seat:  People assume you’ll change things quickly to “prove yourself”. They brace for loss even before you speak. Hired seat:  People watch for hidden agendas: “New boss means new rules, new blame.” They protect themselves. Promoted seat:  Your peers worry the old friendship is now replaced by authority. They fear loss of comfort and access. Different seats, same emotion underneath: don’t take away what keeps me safe. Weighing Scale Think of an old kirana shop. The weighing scale may not be fancy, but it’s trusted. The shopkeeper has used it for years. Customers have seen it. Everyone has settled into that comfort. Now imagine someone walks in and says, “We’re upgrading your weighing scale. This is digital. More accurate. More modern.” Sounds good, right? But what does the shopkeeper hear ? “My customers might think the old scale was wrong.” (loss of trust) “I won’t be able to adjust for small realities.” (loss of flexibility) “If the digital scale shows something different, I’ll be accused.” (loss of safety) “This was my shop. Now someone else is deciding.” (loss of control) So even if the new scale is better, the shopkeeper will resist or accept it politely and quietly return to the old one when nobody is watching. That is exactly what happens in companies. Modernisation Pitch Most leaders pitch change like this: “We’ll become world-class.” “We’ll digitize.” “We’ll improve visibility.” “We’ll build a process-driven culture.” But for the listener, these are not benefits. These are threats, because they translate into losses: Visibility can mean exposure . Process can mean loss of discretion . Digitization can mean loss of speed  (at least initially). “Professional” can mean loss of status  for the old guard. So the person across the table is not debating your logic. They’re calculating their losses. Practical Way Watch what happens when you propose something simple like daily reporting. You say: “It’s just 10 minutes. Basic discipline.” They hear: “Daily reporting means daily scrutiny.” “If numbers dip, I will be questioned.” “If I show the truth, it will create conflict.” “If I don’t show the truth, I’ll be accused later.” In their mind, the safest response is: nod, agree, delay. Then you label them “resistant.” But they’re not resisting change. They’re resisting loss . Leader’s Job If you want adoption in an MSME, don’t sell modernization as “upgrade”. Sell it as protection . Instead of: “We need an ERP.” Try: “We need to stop money leakage and order confusion.” Instead of: “We need systems.” Try: “We need fewer customer escalations and less rework.” Instead of: “We need transparency.” Try: “We need fewer surprises at month-end.” This is not manipulation. This is translation. You’re speaking the language the system understands: risk, leakage, blame, customer loss, cash loss, fatigue. Field Test: Rewrite your pitch in loss-prevention language Pick one change you’re pushing this month. Now write two versions: Version A (your current pitch): What you normally say: upgrade, modern, efficiency, best practices. Version B (loss prevention pitch): Use this template: What are we losing today?  (money, time, customers, reputation, peace) Where is the leakage happening?  (handoffs, approvals, rework, vendor delays) What small protection will this change create? (fewer disputes, faster closure, less follow-up) What will not change?  (no layoffs, no humiliation, no sudden policing) What proof will we show in 2 weeks?  (one metric, one visible win) Now do one more important step: For your top 3 stakeholders, write the one loss they think they will face  if your change happens. Don’t argue with it. Just name it. Because once you name the fear, you can design around it. The close If you remember only one thing from this week, remember this: A “good idea” is not enough in a legacy MSME. People need to feel safe adopting it. You don’t have to dilute your standards. You just have to stop selling change like a TED talk and start selling it like a protection plan. Next week, we’ll deal with another invisible force that keeps companies stuck even when they agree with you: the status quo isn’t a baseline. It’s a competitor. (The writer is CEO of PPS Consulting, can be reached at rashmi@ppsconsulting.biz )

India and Bangladesh: A Tango Gone Awry

An unelected regime, rising fundamentalism and great-power meddling have pushed India-Bangladesh ties to their coldest point in decades.

Foreign policy is rarely forged in the chancelleries alone. It rests on sturdier foundations: a government’s legitimacy, public consent and a coherent sense of economic and military purpose. When those pillars weaken, diplomacy becomes reactive and neighbours feel the tremors. Bangladesh today offers a cautionary tale. Its interim administration headed by Muhammad Yunus appears to be presiding over not a transition but a painful unravelling.


That diagnosis is no longer whispered only by critics abroad. At a recent dialogue hosted by a prominent think tank, Brigadier (ret.) Sakhawat Hossain, an adviser to the interim government, conceded that core state structures had “collapsed” and that the prospects for credible general elections were uncertain. Other analysts have been blunter still: with key political forces excluded from the electoral process, any vote risks lacking the minimum conditions of fairness and inclusion. Bangladesh, long praised for defying the pessimists, now looks perilously close to confirming them.


Hardline Drift

The interim government has tied itself in knots of its own making. It enjoys tentative backing from the Bangladesh Nationalist Party (BNP), but that support has frayed since the death of Begum Khaleda Zia, the party’s matriarch and last unifying figure. To compensate, the administration has edged closer to an assortment of religious and hardline groups like the Jamaat-e-Islami, the transnational Hizb ut-Tahrir and the clerical network Hefazat-e-Islam among them. At the same time, it has flirted with the creation of a so-called ‘King’s Party’ - a pro-government outfit drawing on select leaders from the student movement and aligning itself with ideological hardliners. The result has been a predictable resurgence of fundamentalism, a shrinking political centre and mounting instability.


Nowhere have the consequences been starker than in Bangladesh’s relations with India. Ties that once appeared resilient and anchored in trade and quiet security cooperation have chilled to a degree unseen in years. Attacks on minorities, particularly Hindus and Hindu temples, have risen sharply. India’s consular presence has faced threats. New Delhi accuses Dhaka of sheltering separatist elements linked to violence in Assam, Tripura and elsewhere in India’s northeast. Illegal migration across the porous border has surged, fuelling economic and security anxieties south of the frontier. Meanwhile Bangladesh’s growing warmth towards China, Pakistan and Türkiye has set off alarm bells in New Delhi.


The atmosphere darkened further with the killing of Sharif Osman Hadi, a recognisable face of Bangladesh’s agitation politics, shortly after the announcement of election timelines. Responsibility was swiftly pinned on India, though no credible evidence was produced. What followed was a wave of violence targeting political opponents, minorities, journalists and even diplomatic missions. Islamist networks seized on Hadis’s death as a rallying cry.


India, for its part, has its own grievances. It is uneasy with the interim government’s apparent susceptibility to fundamentalist pressure and the steady drumbeat of anti-India rhetoric. Dhaka, meanwhile, bristles at India’s decision to offer refuge to Sheikh Hasina and at her occasional interventions from exile. It has also taken umbrage at New Delhi’s criticism of moves to ban the Awami League and its defence of Hasina’s right to free expression. Such disputes are hardly unprecedented in South Asia. What is striking is how rapidly they have corroded the relationship.


Foreign Meddling

Why has the slide been so steep? One answer lies beyond the subcontinent. Many in New Delhi see the imprint of American diplomacy in the fall of Sheikh Hasina and the elevation of Yunus, long viewed in India as sceptical at best and hostile at worst. The chief adviser himself has lent fuel to such suspicions, describing the change of government as “an amazing, meticulous design” - not merely a spontaneous student uprising but the product of careful planning. Whether or not that reading is shared in Washington, its consequences are visible enough: a Bangladesh that seems increasingly comfortable defining itself in opposition to India, even as its own economic momentum falters and political stability ebbs.


The rise of fundamentalism has further dimmed the prospects of a free and fair election that might restore a more balanced foreign policy. An India-friendly government, once assumed to be a plausible outcome of any transition, now looks a distant hope. Instead, New Delhi faces a neighbour that is politically fragile, administratively fractured and ideologically polarised.


Pakistan, with its long experience of proxy mobilisation, will be tempted to encourage Jamaat-e-Islami’s resurgence and exploit Bangladesh’s governance paralysis. China, for now content with transactional economic ties, is poised to deepen its leverage as Dhaka grows more dependent on foreign funding. Both trends threaten to narrow India’s strategic room for manoeuvre in its eastern neighbourhood.


What, then, is to be done? The era of easy assumptions about India–Bangladesh amity is over. New Delhi must accept that the familiar tango built on incremental trust and quiet accommodation may no longer be viable. Instead, it should focus on insulating itself from emerging economic and security risks: tightening border management, diversifying supply chains and engaging Bangladeshi society beyond the current ruling circle. Moral clarity, though unfashionable in geopolitics, will matter too. As Eleanor Roosevelt once observed, doing what feels right rarely spares one from criticism. But in a region where hesitation invites mischief, resolve may yet prove the safer course.


(The author is a retired naval aviation officer and a defence and geopolitical analyst. Views personal.)

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